Banks could reap $100 million in fees from LSE-Refinitiv deal

LONDON: A pool of ten investment banks working on the London Stock Exchange Group's $27 billion purchase of financial-data business Refinitiv could reap advisory fees of up to $100 million, according to industry estimates.

The acquisition ranks as Britain's biggest deal so far this year and Europe's second biggest after Novartis's spinoff of its eyecare division Alcon in April, according to Refinitiv data.

The LSE said the transaction would be a "defining moment" in its history as it will transform the exchange operator into a major distributor as well as creator of market data competing with Michael Bloomberg's financial data empire.

Investment bank boutiques have played a key role in engineering the deal.

They will potentially share an overall fee pot of $80-100 million along with some Wall Street banks, Freeman Consulting estimated.

Canson Capital Partners, led by 50-year old Italian banker Matteo Canonaco, worked on the deal on behalf of Refinitiv's majority owner Blackstone Group Inc, according to the LSE statement.

Canonaco has worked closely with Refinitiv's boss David Craig since 2013 and was recently joined by Evercore and Jefferies in shaping the deal when talks gained traction in May, four familiar with the matter sources said.

Evercore and Jefferies were mentioned in the LSE statement as Refinitiv's advisers.

Thomson Reuters Corp, which owns a minority stake in Refinitiv and is the parent company of Reuters, drafted in its long-term adviser Guggenheim Securities with 56-year old senior managing director Fares Noujaim leading the talks, the sources said.

Noujaim, who worked at Bear Stearns for more than two decades and later became Bank of America Corp's executive vice chairman of global corporate and investment banking, previously led the merger between Thomson Corporation and Reuters Group Plc back in 2008. Most recently he represented the Toronto-based firm when it sold Refinitiv to Blackstone in a deal that completed in October.

Another US investment bank boutique, Centerview, has been involved in the deal on behalf of Thomson Reuters alongside Canada's Toronto-Dominion Bank, the sources said.

LSE tapped another independent advisory firm, Robey Warshaw, to handle the deal alongside Goldman Sachs and Morgan Stanley. Its corporate broker Barclays also acted as financial adviser and sponsor, according to the LSE statement.

Robey Warshaw was previously involved in negotiating a failed merger between the LSE and Deutsche Boerse back in 2016.

The four banks working with LSE could share a pool of $40-50 million, Freeman estimated, and a similar windfall would go to the six banks representing Refinitiv's shareholders.

Blackstone and other minority investors, including Canada Pension Plan Investment Board and Singapore state fund GIC, will control 22% of the combined firm and get two board seats, while Thomson Reuters will have a 15% stake in LSE and one board seat.

Blackstone and Thomson Reuters will be paid with LSE shares and will have to remain fully invested for at least the first two years as part of a lock-up arrangement which will come to an end on the fourth anniversary of completion.